Erie Ins. Co. v. Amazon.Com, Inc.

• Decision Date: 22 May 2019
• Docket Number: No. 18-1198,18-1198
• Citation: 925 F.3d 135
• Parties: ERIE INSURANCE COMPANY, a/s/o Minh Nguyen and Anh Nguyen, Plaintiff - Appellant, v. AMAZON.COM, INC., Defendant - Appellee, and Ebay, Inc., Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

925 F.3d 135

ERIE INSURANCE COMPANY, a/s/o Minh Nguyen and Anh Nguyen, Plaintiff - Appellant,

v.AMAZON.COM, INC., Defendant - Appellee,andEbay, Inc., Defendant.

No. 18-1198

United States Court of Appeals, Fourth Circuit.

Argued: March 21, 2019

Decided: May 22, 2019

ARGUED: John Kerry Weston, SACKS WESTON DIAMOND, LLC, Philadelphia, Pennsylvania, for Appellant. William Brendan Murphy, PERKINS COIE LLP, Seattle, Washington, for Appellee. ON BRIEF: Jesse M. Cohen, SACKS WESTON DIAMOND, LLC, Philadelphia, Pennsylvania, for Appellant. Eric D. Miller, Laura Hill, PERKINS COIE LLP, Seattle, Washington, for Appellee.

Before GREGORY, Chief Judge, and NIEMEYER and MOTZ, Circuit Judges.

Affirmed in part and reversed in part by published opinion. Judge Niemeyer wrote the opinion, in which Judge Gregory and Judge Motz joined. Judge Motz wrote a concurring opinion.

NIEMEYER, Circuit Judge:

The main issue before us is whether Amazon.com, Inc., is subject to liability for a defective product that a customer purchased on its website from a third-party seller with Amazon "fulfilling" the transaction by storing the product and shipping it to the customer.

Trung Cao of Montgomery County, Maryland, purchased a headlamp on Amazon’s website and then gave it to friends as a gift. The headlamp’s batteries apparently malfunctioned, igniting the friends’ house and causing over $ 300,000 in damages. Erie Insurance Company, which insured the house, paid the loss and now, as subrogee, is pursuing this action to obtain reimbursement from Amazon for negligence, breach of warranty, and strict liability in tort, arguing that Amazon has liability under Maryland law because it was the "seller" of the headlamp. In particular, Erie contends (1) that, based on the services that Amazon provided in the transaction, it was a seller; (2) that, in any event, Amazon was a "distributor," which Maryland law deems to be a seller; and (3) that Amazon was an "entrustee," as the term is used in Maryland’s Uniform Commercial Code, and therefore Amazon passed title to the purchaser of the headlamp and thus should be considered a seller.

On Amazon’s motion, the district court granted summary judgment to Amazon, concluding that Amazon was not the seller of the headlamp and therefore did not have liability for its defective condition. It also held that Amazon was immune from suit under the Communications Decency Act, 47 U.S.C. § 230(c)(1), a federal law protecting internet intermediaries in the online publication of a third-party’s information.

While we conclude that in this case Amazon is not immune under § 230(c)(1), we do agree with the district court that, in the circumstances of the transaction before us, Amazon was not the "seller" of the headlamp and therefore did not have liability under Maryland law for products liability claims asserted by reason of the product’s defective condition.

I

On April 9, 2014, Trung Cao, a resident of Montgomery County, Maryland, purchased online an LED headlamp — "for cycling, camping, [and] hiking" — and gave it as a gift to his friends, Minh and Anh Nguyen, who lived in Burtonsville, also in Montgomery County. Two weeks later, the headlamp malfunctioned, supposedly from a defective battery or batteries, igniting the Nguyens’ house and causing $ 313,166.57 in damages. Erie Insurance Company, the Nguyens’ insurer, paid the loss.

Cao purchased the headlamp on Amazon’s website, and the document evidencing the transaction stated that the headlamp was "sold by: Dream Light" — and "Fulfilled by: Amazon." There can be no dispute that this information was displayed to Cao on the website when he purchased the headlamp. The headlamp was paid for by credit card and delivered to Cao on April 11, 2014, by UPS Ground.

The arrangement between Dream Light and Amazon was governed by Amazon’s comprehensive "Amazon Services Business Solutions Agreement" and included "fulfillment" services offered by Amazon. Under the fulfillment program, Amazon provided logistics services for a fee. The seller could ship its inventory to an Amazon warehouse for storage and, once an order was received online for a product, Amazon would retrieve the product from inventory, box it, and ship it to the purchaser. In this case, Dream Light shipped its headlamps to Amazon’s warehouse in Virginia, and, when Cao’s order for one came in, Amazon packaged and shipped it to Cao using the third-party shipper, UPS Ground. As part of its fulfillment services, Amazon also collected payment and, after withdrawing its service fee, remitted the balance to Dream Light. Dream Light set the price for the headlamp and created the content of the product’s description used on the Amazon site. While Dream Light was also allowed under the program to "offer any warranty," apparently no explicit warranty information was provided in this case.

After paying the fire loss, Erie Insurance Company, as subrogee, commenced this action against Amazon, asserting products liability claims based on its allegation that Amazon was the "seller" of the headlamp and therefore had the liability attributable to sellers of defective goods under Maryland law.

On Amazon’s motion, the district court granted summary judgment to Amazon, concluding that Amazon was not the "seller" and therefore was not liable to Erie. In reaching that conclusion, the court focused on the nature of Amazon’s fulfillment services program:

The question is whether the circumstances of this case in which Amazon "fulfilled" the order converts Amazon into the status of the seller. ... The fulfillment role as far as Amazon is concerned is that it stored the product at the expense and risk of the seller Dream Light. That it allowed the merchandise to be advertised on Amazon’s webpage. That if a purchase was made, Amazon would take the product from its fulfillment center, put it in a box and send it to the purchaser who made arrangements to buy the Dream Light.

Amazon would collect the money and ultimately remit to Dream Light whatever is leftover after Amazon has covered its various charges ....

* * *

I conclude that the case can be disposed of favorably to Amazon on summary judgment because it is not a seller.

The court also concluded that the Communications Decency Act "would preclude the claims in any event." From the district court’s judgment dated January 11, 2018, Erie filed this appeal.

II

At the outset, we address Erie’s contention that the district court erred in holding that Amazon was immune from suit under the Communications Decency Act, which provides immunity "not only from ultimate liability [as the publisher or speaker of information], but also from having to fight costly and protracted legal battles." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc. , 591 F.3d 250, 255 (4th Cir. 2009) (cleaned up). The district court held that the Act applied in this case because Amazon controlled the content of Dream Light’s offer of sale for its headlamp, noting that Amazon had "standards governing the third-party content and controlled the user experience and what the content — what content was displayed." Erie argues, however, that the Act does not apply, positing that if its claims "sought to hold Amazon liable for a misrepresentation made by Dream Light in its Amazon advertisement, then the Communications Decency Act might apply." But, it notes, its claims were "based, not on ... internet content, but on Amazon’s own affirmative actions as a seller (or distributor) of products. ... The Communications Decency Act does not insulate Amazon from liability for its own tortious acts and seller warranties."

The Communications Decency Act provides that "[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." 47 U.S.C. § 230(c)(1). The Act defines "interactive computer service" as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server," id . § 230(f)(2), and "information content provider" as "any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service," id. § 230(f)(3).

By its terms, therefore, the Act provides immunity for claims against providers of interactive computer services, such as Amazon, "as the publisher or speaker of any information provided by another information content provider ." 47 U.S.C. § 230(c)(1) (emphasis added). Thus, to implicate the immunity of § 230(c)(1), a claim must be based on the interactive computer service provider’s publication of a third party’s speech. See Zeran v. Am. Online, Inc. , 129 F.3d 327, 330 (4th Cir. 1997) (concluding that "lawsuits seeking to hold a service provider liable for its exercise of a publisher’s traditional editorial functions — such as deciding whether to publish, withdraw, postpone or alter content — are barred"); id . (noting that the Act was enacted, "in part, to maintain the robust nature of Internet communication"); see also Nemet , 591 F.3d at 254 ("Congress carved out a sphere of immunity from state lawsuits for providers of interactive computer services to preserve the vibrant and competitive free market of ideas on the Internet" (cleaned up)).

The products liability claims asserted by Erie in this case are not based on the publication of another’s speech. The underpinning of Erie’s claims is its contention that Amazon was the seller of the headlamp and therefore was liable as the seller of a defective product. There is no claim made based on the content of speech published by Amazon — such as a claim that Amazon had liability as the publisher of a misrepresentation of the product or of defamatory content. See Nemet , 591 F.3d at 252 (protecting postings published on the Internet that were "false and harmful to [the plaintiff’s] reputation"); Zeran , 129 F.3d at 328 (...